STRATEGIC THOUGHTS

FOR
FINANCE AND COLLECTION
FEES
REPORT BY: ANDREA D. SANTIAGO BSBA 3D
 Many credits application agreements include terms that add finance
charges in the event that a customer is delinguent. Collection charges
may also applied if the account is placed for collection.
 Sometimes when a client is placing an account for collection with a
collection agency they will include finance and collection charges.
 Based on our experience, we often advise that this is usually not
productive and in many cases has the opposite effect.
Here is our guidelines when it comes to this matter.

1. Adding finance and collection charges is only an option if you have written agreement
with your customer that allows for these charges.

2. Even with written agreement,, some states do not allow these charges(especially
collections charges)to be added. In these states, it can only be added by a court order.

3. If permitted by the state and added, it often has the opposite effect, diminishing the
deptor’s willingness to pay. Typically, your deptor owes more people than just you
and he lacks the funds to pay everyone. All things being equal, the one not seeking
fees is the one gets paid.

4. Our advise is not to seek these fees at the collection agency level, but only seek them
if it becomes necessary to pursue through litigation. At that point you are already in
for a long fight, so there’s no real downside. Of course, during our communication
with your deptor, we’ll point out that you will seek these costs through the courts if
you decide to pursue this is litigation.
 We understand this is a frustrating area and you’re right in
wanting every penny owed to you for product or service
provided by your company.

 However our goal is to give you the best advise to maximize

recovery and avoid litigation when dealing with business
entities with limited dollars.

 In the end, however, these are yours dollars therefore, we’ll

handle an account any ways you request if permitted by law.